I receive new enquiries every day from people who wish to make an appointment to discuss their separation or divorce from their spouse. They range from people who are unhappy in their marriage and are assessing their options to people who have been living apart from their spouses for 10 years but have never regularized their situation.
They focus on whether they will be able to stay in the family home, the mortgage, what maintenance they will receive, or occasionally what their rights are if they receive an inheritance. I cannot remember someone ever asking me whether they can keep their gold-plated, defined benefit pension.
Yet sometimes your pension can be one of the most valuable assets that you have.
I perfectly understand that your priority, first and foremost, will be to save the marriage and work hard in Separation and Divorce Counselling, etc. to achieve this. After this, there will be all the emotional fallout caused by the end of the marriage. This doesn’t even include the problems where children are also involved.
The Benefits of Long-Term Thinking in a Divorce
This brings me to my point that we naturally, as human beings think short-term. We think about where we are going to live, where the children are going to live, how am I going to survive financially. We focus, understandably, on the here and now and will look at the future some other time. This can be difficult for your family law solicitor as they will want you to focus on the long term. We are trained to look after your interests in the long term, and not just the short term. One of the key things that will be looked at is the same as what the court will look at: How are both parties going to be fairly provided for, going into the future?
You might say that: “It was my decision to work in a job that provided a defined benefit pension. I decided to be a teacher/Garda/Judge. He/she decided to work in the private sector and had the potential to earn fortunes. Now, why would he/she be entitled in any way to my income when I retire?”. You may have a point but the court doesn’t really see it like this.
So what happens to my pension in a divorce settlement?
When it comes to pension entitlement in divorce, the main thing that you have to know is that the pension is in the family pot which has the potential to be divided. If you understand this, you will understand the process much better. If one spouse has a substantial, defined benefit pension, the other spouse has zero pension but maybe really desires to stay in their jointly owned family home, then that spouse may decide to sacrifice any claim to the pension and receive a half share of the family home transferred to their name. This is obviously a simplistic example, and the courts would look at the length of the marriage, earning capacity of the respective spouses, when the person started paying into pension, how much would the person have to pay into a pension to receive a similar benefit, etc., when deciding.
It seems obvious to everyone that the physical properties that each spouse owns will potentially have to be divided when divorced, even if not in joint names. It is equally obvious that if there are children of the marriage, a custody and access arrangement will have to be agreed upon.
What is not always obvious though, is that the pension of a guaranteed €700 per week, for example, is now up for grabs too. When the court decides on how to divide up the family assets during divorce, these financial assets must also be taken into account. That is the key thing to remember here.
This helpful report from a pension and divorce case here in Ireland gives a practical example of how a judge looked at dividing up a pension and what factors they considered.
